Hello all first post here on Bigger Pockets (although I have been an avid read and listener to their blogs, podcasts and forums for a while now). I basically thought that I would step up and introduce myself and maybe get a few ideas about what my next steps should be. (Warning kind of long)
I'm a 26 year old high school teacher and I just recently moved back to small hometown in Northern Michigan. I decided that in addition to teaching I wanted to become a real estate investor/ Landlord.
I started out buying a house from my grandpa. He is a local landlord (owned over 30 properties and self managed them all) that was in the process of retiring and getting rid of all of his rentals. He was asking $33,000 and offering seller financing. (3500 down, financed at 6%, no amortization but 350 a month until it was paid off). I bought this house last August and have been living in it ever since, but I plan on upgrading and renting this house out. As a bonus I used an IDA program through our local housing agency to get 3,000 towards the down payment. I owe 25k on this property
At the same time I bought another property from him on the same terms but for 38k. This second house has a renter in it. She has been there for 4+ years and has been a great renter for me over the past year or so. I owe 32K on this property. Both of these properties are in good to very good shape; new roofs, HVAC, Hot water, Paint, Carpet, updated plumbing and electric. So basically I have been very lucky over my first year
Moving forward I would like to acquire two more pieces of property this year. The first one is a house for myself. I have one in mind, another owner-financed deal from a different gentleman. (45k, wants,10k down @6%) Nice little place a couple of acres outside of town and a nice pole barn. Perfect set up for me. I will be closing on this property at the end of June.
Final house hope to purchase by December of 2015 or January of 2016. This is my grandpas last house so same financing and down payment. Asking price is 32k.
So I guess that my big question is where should I go from here? Assuming that I have four properties by the end of the year (3 rentals and one personal) how would I go about financing more? I am sure that no bank will want to finance me already having four payments. Plus my debt-to-income will be astronomical. Other than my houses I have no debt and my credit score is 730+. Basically my goals right now are buy and hold, but I would not be adverse to trying other avenues like flipping. I attempted to get my first land contract refinanced as it appraised for 45k, but they will only due 10 year amortizations on loans under 40k so I am not really interested in that as it bumps up my monthly payment. Anyways, I have some ideas on how to move forward on this one
As I see it I have a few options;
- Sit Back until one or more of my rental houses is paid off?
- Save for a down payment and continue to look for seller financing?
- Private money?
Any advice you guys have will be greatly appreciated
BP is a treasure chest full of useful resources. You will find resources here from blogs to pod casts and forums. You can also send messages to members which is my favorite part of the website.
Michigan is a wonderful "contract for deed" state when you buy.
See an attorney about how to draft a contact for deed agreement when buying, then leasing out
Have your wife buy the houses.
Then you buy the bank financed ones in your name.
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